The real stories from inside the F1 paddock

A bad week for motor sports

You may have read stories in recent days of Cosworth being for sale; of Ford and Mini pulling out of the World Rally Championship; of Lola closing down and Porsche saying they are not coming in to Formula 1. Lotus is on the ropes and is now little more than a brand in search of a purpose.

This is all happening in the space of a few sorry days. This is not day-to-day Internet waffle. This is serious stuff. Lola and Cosworth, and the long gone March Engineering, were the key players in creating the British Motorsport cluster of which the UK likes to boast.

These were companies that trained great designers such as Patrick Head, John Barnard and formed the generations that built the great cluster. The world of F1 lives in its own bizarre little bubble, quibbling over whether or not there should be a budge cap that will make the businesses profitable and relevant, while the industry they represent is falling apart around them.

Perhaps the F1 world can go on as it is, with a few big teams and a bunch of also-rans, but I fear that the whirlwind that has clobbered the rest of the industry will eventually bite F1 as well, it is already like. Wolf nipping at the heels of the weakest members of the herd.

It is bonkers to go on spending willy-nilly on things that have no value in the real world. It is bonkers that half the money that is generated by the sport disappears into the pockets of financiers who would not know a Minardi from a McLaren. It is bonkers that the car manufacturers do not want to get involved in the new engine formula in 2014, when it would provide exactly the technology they are researching.

F1 needs to be brutally honest and ask itself why this has happened and what can be done, not only to make sure that F1 survives as it is, but also that the industry that grew around it – and that feeds it – does not disappear while everyone is busy gazing at their own fundaments.

Share this:

Like this:

Related

109 Responses

You think that you understand business and finances, but you are a far cry from being in that position. Being a good jouno and an experienced smart fellow will not make you understand such things.

It is not bonkers that half the money goes to banks….you should be aware that a large portion of the world is basically financed by US pensioners and middle east oil money. Moreover, eventually everything is financed by the world population, the bigger an industry grows the more likely this will stay true….

Thanks for your charmless comment. I am sorry but I do not agree with your view that these things are inevitable. It is bonkers that the racing people (and/or the FIA) did not have the business brains to borrow money from the banks (as CVC did) and buy control of their own destiny. What is required is something with some nous, who is not there solely to feather his own nest.

Exactly Joe, all CVC did was borrow money, and now F1 is paying off CVC’s debt so that one day CVC can sell it and make lots of money.

Why didn’t or why don’t F1 people, (teams, FIA, promoters, sponsors, even Bernie) do that instead, then the money that is borrowed from banks is paying off their debt and at the end of it all they will own it.

About borrowing the money, in theory, in the right market, it can be too easy to get a bridging loan, basically on call money, to back a bid. It’s timing that matters. A but like how “liar loans” could be had at the top of the property game in the UK. Just sign on the dotted line . . it hardly matters what your plan is.

That said, because I don’t know if such a opportunity is forever behind us, or if the PE mavens so rule the roost there’s no look in, I propose a modest idea: that the teams form a different trust, one they pay into, to hire a serious team of economically savvy people, with the object being to explore when they might make a bid for something useful, and to raise commitments for finance on contingency.

Not saying that is easy, not at all, and consider that who might want to influence appointments is likely not qualified to assess a interviewee, but I think that there will be a long drag on the sport as uncertainty is hurting it now, and the wide economy is crackpot.

By just raising a small team to sit and keep on that case, you indicate early you are serious about the long term considerations, likely attract staff as it develops – it’s hardly a dull problem to work on – and above all send a signal that you mean to do business, *when* the opportunity presents.

If the teams could even in simple majority, agree to authorise such a trust with the power to act, then it may be they could time it right at the next opportunity.

In recent comments, I have suggested that really simplified economic changes, the kind most people expect but cannot predict with accuracy, might create a strong see-saw wave across the F1 world. Like death and taxes, I think over time, (oh, that phrase is as good a get out as ceteris paribus!) some economic moves will simply happen inevitably. It is only the recent, exaggerated post 87 crash, propping up of markets that is perma-denial of market sanity. So it is time that F1 teams had a close connection to what could shake up the sport, and some kind of plan or planners to take positive and without notice advantage of situations when they start to move.

They could have made a packet buying CVC bonds in recent years, and that would not have been at risk of insider dealing, if they had set up a arms length office. Just one little thought . .

It’s not a breakaway idea, it’s even a solidifying idea, and maybe even a 5 year mandate would be enough to build a good “financial protection team”, for wont of a better name.

Oh, and under certain circumstances, having a trust mandated to do deals to secure their financial future, might make it simpler for teams to leverage some equity, as subordinated collateral. If CVC and Bernie can play high finance, why does anyone think a bunch of racers with awesome maths physics and engineering skills, could not come up with a plan? Those are just the academic fields from which the “high” finance lot have been hiring all this time . .

Another great article – i don’t have time to read the responses so apologies if i’m repeating anyone.
I get the feeling everyone is just waiting for Bernie to expire – then we’ll have a watershed and a new dawn for the sport where things I hope will be very different…

I actually think the opposite. For all Bernard’s faults, he has the sports interests at heart because it affects him personally. He knows that the sport must survive, even though the players change all the time. He doesn’t think one team or driver is greater than the sport.

If Bernard “retires”, then the sport passes control (if you believe Bambino is effectively under his control) to Slavica, Tamara, etc. Or the PE guys in NY. Do you think they have the brains or care about the sport as much as Bernard?

I know I’ll get flamed for saying this, but it would be nice to see F1 put some money back into the very companies that started it and formed the backbone of knowledge that it has grown from. I know it has no obligation to and that there’s no point supporting a company that can support it’s self in the future, BUT I see very little of anything coming back from f1 to any good causes.

You mean Minardi is more – when did that happen?! Seriously, just passing the computer and had to comment (as no doubt many will). Seems to me, in my humble opinion, that you’re entirley right but honestly will that happen given the current structure? With finance and sport firmly segregated there’s no motivating force.

Perhaps Mr E is the problem in all this. I was reading a article recently that lots of business executives have been moving around in their jobs as they do not have the right skill set to weather these austere times.

While Mr E has done a lot for the sport, with someone with his power and influence within the F1 world could not get the teams to agree to a budget cap and other things like this. Perhaps the time is right to find someone else who could lead F1 in this brave new world.

Bernard can get the teams to agree, but I’m guessing there is method to his madness and it is in his interests for them not to agree. Joe says it well “look to what Bernie doing and he wants the opposite to really happen”!

Joe, do you think the DTM and Japanese Super GT tie-up shows that the U.S. series is a go with the big 6 manufacturers? Competing in 3 series with a spec chassis and engines that are already developed, in their shoes, I would see this as preferable to F1s current cost and politics.

Great post Joe. The ‘also rans’ is a very good point – what happened to F1s brave new world? Caterham, Marussia, HRT, what are we, three years on – the impact of those teams, nil. Not a point and maybe two Q2 performances. The F1 old guard untroubled by the change.

No, I think not. They allow a great deal of innovation in the hybrid research, which is what the car manufacturers want. Remember that these rules were formulated after long discussions with the manufactures of the world. OK, we have since encountered a recession but this is what THEY wanted.

Look at MotoGP and how the manufacturers put in place the exact rules they wanted to run by and it created a situation over the years where manufacturers pulled out entirely (Suzuki, Kawasaki) or reduced the amount of bikes they were willing to support, there were only 12 bikes on this year’s grid for a world championship that were the manufacturers’ purebred prototypes adhering to the rules they wanted.

Not surprised about Ford and MINI withdrawing from the WRC. It’s not an easily accessible spectator sport for the masses and Ford and BMW need to draw custom from the masses. Pay TV is partially to blame. It may also have dawned on BMW that MINI remains a girls car in the majority despite the attempts to man-up it’s image through WRC and a bloated SUV-alike version.

Your comment regarding the damaging parasitic activity of the financial industry (supported by politicians & law) has everyday relevance to everyone on this planet. The cost of living, goods and services are artificially high because easy credit allowed that to be so. For decades they have been sucking life blood from all areas of life and not just from motorsport. In 2008 the world woke-up to the fact but it seems it’s too late. We can’t kill the parasites (insurance/financial industry) without killing the host (capitalism entirely fueled by credit). :(

The problem with all this is that F1 isn’t hiding in some bubble ignoring the demise of the supporting cast in British motorsport. I’d say that it’s actively participating in the demise – not in the Caius Cassius role, possibly not Brutus but a conspirator nonetheless.

F1 is the juggernaut of world motorsport (definitely true outside the USA). And like all juggernauts, it’s flattened the competition, casting rivals aside like nothing more than twigs. There are all sorts of arguments for and against F1 as a formula, as a sport if you want to compare it to, say, LMS or MotoGP, but in terms of media exposure and financial backing there’s no contest.

We can thank a combination of Bernie, modern communications technology and certain sections of the media for this.

And much as there might not be much direct competition between say, F1 and Group C sportscars, they are still competing for slices of the same pie – both in terms of consumer interest & spending and (by extension) of sponsorship cash.

Most sports appear to be suffering from the same effect – why watch your mediocre local team when you can watch the best in the world do their thing from the comfort of your own home, with images and sound beamed into your house from half a planet away?

F1 is not some air-headed buffoon drifting through this apparent carnage in motorsport engineering. It’s actively participating by hoovering up the vast majority of the pie and leaving everyone else to starve, it’s the fast-growing tree blocking out the sun, leaving the smaller rivals to die in the shade.

Photosynthesis is a harsh mistress.

But let’s also have some perspective, some sweetness to counter the bitterness, some sugar in our coffee.

F1 teams are increasingly so much more than just that: McLaren’s tech diversification is a big success and Williams are heading the same way. For every Lotus sob-story there’s a Caterham revival story. For every legendary engineer who was trained at March there’s a young genius on the Red Bull Racing graduate scheme.

Look beyond F1 and you have stuff like Aston Martin’s turnaround from the brink of oblivion to being one of the leading sportscar brands with a fairly successful motorsports division to go with it. You have Ariel and Ascari and Noble who make bonkers little track day racers which Top Gear love to throw around a track.

So I’m okay with a “bad week” for UK motorsport. I’m aware that F1 is, at least in part, responsible. But I also know that the companies that go under tend to be those with a history of good engineering rather than those still doing much good engineering.

After all, it’s pretty hard to write an article today about the visionary engineers which will mould F1’s future and how they might currently be learning their craft designing Ariel Atoms.

“It’s actively participating by hoovering up the vast majority of the pie and leaving everyone else to starve, it’s the fast-growing tree blocking out the sun, leaving the smaller rivals to die in the shade.”
At least the EU commission stopped them spraying weedkiller on all the other formulae. Unfortunately most have never recovered from it though.
Lost track of who currently owns Aston but it has fond memories of Newport Pagnell, both sides of the main road. (will post Aston H&S story on my blog)

Very perceptive, I think. When I was a kid growing up in the 1980s and into the 1990s we had prime time coverage of a whole host of motorsport categories. I could name British F3 drivers, BTCC was huuuuge, the Lombard RAC got an hour or more of nightly coverage and updates throughout the day, the Le Mans Jags were a national icon, and we had superbikes and Grand Prix bikes all over the place. Now? Hmm…

I often wonder, how much was a bit of directive, post British Leyland, and all that. Word from high, to get people paying attention. There are some exceptions when I think the free market does too poor a job. Having said that, New Labour was such a behemoth in the ad market, I wonder if adland has recovered their instincts here.

But despite my detractions, Jem’s comment is calling me to re read a couple of times. Top stuff. My Captain Sunshine woes are quite tangential to real industry. Though I really wish we’d get selling more seriously. I perceive there’s nutty amounts of good manufacture and design hiding in imaginary shadows. I think there’s something a bit psychological about this, and regardless F1 is a pinnacle of autosport, we need to wake up to the rest which is connected to it.

Why, oh, why, with the nutty good internet things we can do, general racing cannot be fed to a audience, I have no idea. Seriously, no idea. Any which way I look at it, never find a showstopper argument. If that were improved, it would be far from harmful to F1, quite the opposite, I think. *

Not, yet, having had a family of my own, even despite that, it makes me quite angry we don’t seem to speak up enough. I just hope the online world won;t scupper my little print game in a way nobody expected (by busting the economics, not by market share). Yeah, I’d like to think if I have kids, this might be getting better by the time they wonder what jobs they’d like. Meanwhile might be a bit harsh, though.

* Joe might have some interest in this, but I hadn’t noticed a outfit called CloudFlare until recently. They are a CDN (Content Distribution Network) and just rolled out a bunch of data centers around the world. Provided you run your own domain, and can delegate DNS to their name servers, they add no charges for bandwidth. They also appear to be financially healthy. I presume they have a game on selling traffic stats, as well as their premium services. But it’s nutty insane that you can install a WordPress plugin, and go live with distribution like they have for nothing, or next to nothing. So, distribution of content (though not I think in this case, video) is almost a no – brainer.

My apologies if I ran off track there, (okay, not unusual for me) but this is my whole “Why are we not using all of this?” moan about the technology. My old headmaster is (within limits) famous for having argued that private education fixes education like taking a starving orphan to the Ritz solves famine. Here, Scarbs, a few unusual places (somehow I count F1 Rejects positive for the humor) are all wonderful, but by no means enough. There’s no message in F1 – that I know of, save Joe – nothing you want to bite on. When people complain I write far too long comments, I simply apologize: sorry, but even when I am way off form, I have a bee in my bonnet that far less than sufficient is said, far fewer than can be engaged are engaged. When F1 folds back into my or rather my putative family’s economic future, I feel it worth some effort. Thanks Jem, I was getting all too sanguine lately, got me engaged again. I hope I might find something to do, above just rambling about it all.

Sorry to reply to myself, but it just occurred to me, in as many words at least, that too much journalism is essentially parasitical of its subject, adds nothing. Opinions seem to me mongered from once respectable broadsheets, to FOX News, cud chewed and regurgitated, and it gets far worse in the kind of trade magazines I see most often. I guess I was happy once, fiddling around in the bowels of deal nonsense, far removed from all of this, but this blog seems to have changed that. I just wonder how far one can extrapolate a good attitude, long pondered over – speaking of myself, not Joe, mind! – but not yet fully formed.

It is already arranged, the income for FOM is guaranteed for 7 or 8 years, but the business model does not require anyone to watch or attend the races either in person or on tv. Thus it is only a matter of time before the withdrawal of sponsors that finance the teams, if no one watches there is no point sponsoring a team or driver.
Once the sponsors start disappearing only manufacturer or rich teams could survive. (as in the very early days)
If I were CVC I would sell fairly soon. They have already sold much of their stake, but probably have a few years left before the slow motion implosion.

In my opinion there are two many one make series, the industry requires a F2 championship as per 70’s and early 80’s that encouraged teams to build their own cars, today’s manufacturers need a platform outside of F1……

It’s a great idea. Very sadly it’s almost completely one-make series all the way down. Even F3 which is nominally an open manufacturer series is so dominated commercially by Dallara, that it’s a de facto one make.

Most of the diversity is in the smaller “LMP3″ sportcars, but going upwards LMP1 is so sominated by large car manufacturers that a small business has little prospect of growing into a big one.

There seems little hope for another Williams, Mclaren or even Ferrari to grow out of the business of making racing cars.

I’d love F2 to return. It was mothballed about when my voice broke. I had to look up when, to be sure, because it’s a dim memory, sadly only really known to me because our town library had a good magazine section. Good days, keeping up appearances for parents by going to library, nose stuck in racing papers! Because I just fact checked a bit, I never knew the drivers were graded, F1 types allowed in, but no points for them so the less privileged, as it were, could crack on with their championship. I’m really keen on any top series having non championship races, because I think that would bring out a lot more wholesome competitive attitudes. My Christmas present to myself will be trawling for annuals and any books I can find inexpensively on this era and the “lower formulae”.

Could not Sauber yet grow into a fully rounded team?

When I first read your “grow out of the business of making racing cars” I read it as if they would grow up and kinda get past a fad! Hope you get what I mean. In which case, Williams is growing out of just making racing cars . .oh, sorry, I am being silly, but I think it really is either be part of a bigger parent, or develop external allied business. Boullier’s Lotus at least turned up with a plan to find outside business connexions, though we hear not much about GENII lately. Caterham are clearly not counting on F1 alone. Caterham I mention especially, because although it’s going to be a very interesting path, so much tech like 3D printing, rapid prototyping, pocket supercomputers, well they will pay into the hands of smaller companies. Of course, you have to develop the house skills to make good with all that, cultures do not grow on demand from “the cloud”, but although tech democratises access to many tools, this is not an economy superbly fertile for creating businesses that require decade plus commitments. That’s a hurdle for many companies, and a barrier to entry Caterham have the advantage of being past. Would be cool if Joe could do a piece on how these factors are viewed in the mid term by the engineering boys there. I’d really like to hear how the cultural side of business development is thought of.

I really meant of the era, and I thought in context the revival (which I confess my blinkered eyes missed when it happened) didn’t seem to me the same thing. It certainly doesn’t get a fraction of the coverage it did.

Anyhow, I cut a corner there, but I wasn’t trying to be definitive, Joe!

(did I ever try to be definitive? I’m usually not so try hard, which is just a ruse to say I don’t know that much but save face . . and me having a day? Arggh, just took a week of write offs. Oh, well greeting in the bashing against myself first, if I can :-) )

It’s reassuring, actually, knowing there’s one place I can’t win a argument!!!

Hark! a chorus of people I dealt with this week, chiming in how there are other situations I don’t win arguments, but they need more practise .. they wish. Okay, my ego is done, LOL ~ j

Isn’t it only Lola Motorsports is gone, their defense and other related sections are still humming along quite well. Wasn’t it just the manufacturing and car sales bit that went under anyway and I read that a US company had picked up rights to make spares and the like for the current lmp cars.

The Lola brand is owned by Lola Group Holdings, which is not in administration but the brand is up for sale as well, if anyone wants it. The two main trading companies, Lola Cars International Limited and Lola Composites Limited were both trading currently in administration. Lola Cars International ceased trading on October 5 after its administrators concluded that it could not be rescued. It has debts of more than £20 million. A sale of the assets of the company will be held in the near future. It is hoped that someone will buy Lola Composites Limited, which can then continue to trade under another name.

Good honest stuff – although I don’t suppose Bernie and his masters are interested and won’t be until the money starts to dry up. If the manufacturers don’t want to build the new engines maybe there is something of a blind alley about them – not that I would have any idea

To be honest for me it’s always been the romance of the sound, the personalities, the conflicts etc. that has made F1 what it is – not whether they are spending £10,000,000 a year or £500,000,000 a year to provide this show.

The 70’s were just as much fun as today (in my opinion anyway) – and I certainly had more idea as to what was going on then in a race – nowadays with the extremely complicated tactics (at the moment centred around tyres) it’s extremely confusing to know what’s going on sometimes – maybe that’s where we should go back to – good old Cosworth V8’s and big sticky tyres.

I know it sounds like the ranting of an old buffer (and it is) but I think an awful lot of people would agree. It’s the Hunt versus Lauda Senna v Prost Mansell Piquet that attracts all the interest and press comment and Bernie used to know that (and of course still does – with all the continuing rivalries today – albeit at stratospheric money levels which are needed in order to compete)

Good article Joe. It’s a real concern. Referring to Cosworth – Do you think there’s any chance Mclaren could buy them? It could make sense with their current situation with Mercedes, and them maybe wanting to be seen as a British Ferrari??

I was going to ask the same thing. Would you care to expand Joe ? Have Cosworth nothing that McLaren need for building their own engines sometime down the line – to perhaps accelerate that process ? As I understand it, Cosworth have done lots of research on the turbo engine but can’t go any further without contracts.

The Cosworth situation is interesting, because about 2 years ago they looked at an IPO, and documentation was doing the rounds, and then pulled. I was surprised, as I had always thought of them as pure engine company, which isn’t the case.

I would prefer if they waited, and go for an IPO in say 2014or so when the economy turns around, then people could see what they actually do these days. But it appears there two American owners, both racers – race team owners need the funds.
So of course GKN and Rolls-Royce are now the leading players to get them on the cheap. Both of these companies are good at leaving the “subsidiary” alone.

Joe – Do you know how bad things are at PURE – Craig Pollock engine business? Have they got in the funds to re-start the business, or is this another one to bite the dust?

Taking the talent is one thing, but they have a substantial amount of IP, which is new and valuable. Yes, you could in theory, get the “team”, and hope they can reproduce a better version, but it is a big risk, given the legal court battles now going on over IP rights.

I would go for the whole company, trade sale, rather than wait for them to do an IPO. The risk is lower, and faster rate of return on your investment

But interestingly, there was some comment in the financial press about Cosworth possibly attracting a premium because of their prestige clients “such as Aston Martin and McLaren”… News to me. Definitely seems to suggest that McLaren are already dealing with Cosworth on some level, and if not for transmissions then what? Engines?

Yes, I understand the Ricardo link. What interested me was whether there was any truth in the journalist’s statement that there was already a commercial link between Cossie and McLaren. Are they wrong, are Cosworth consulting on some other non-F1 project, or what?

Looking at Cosworth’s product line, I’d say there’s every chance they supply McLaren. Maybe someone has blown a simple component supply out of proportion? I’d not be surprised, I mean that’s almost proof perfect concrete evidence, the way some F1 scribblers think!

There is so much fundamentally wrong with F1 at the moment that I fear for its long term future. Its always been a bit of an insular, introspective beast, but never before do I remember a time when it was so insular, or lacking in a sort of community camaraderie.

Bernie has done a fantastic job over the years, turning it from a bunch of toffs in tweed with a few grease-monkeys in support, to the global phenomenon now, but things do need to change.

It needs more money to stay in the sport, as you say, and the teams need to work together better for their own collective good… not bitching amongst themselves over minutiae, and be more responsible for each other. It’s no good one team trying to get away with hiding a huge amount of development budget from everyone else, just to “appear” to be abiding by a vague, watered down agreement that holds no actual weight.

Toffs in tweed? Bruce McLaren, Jack Brabham, John Cooper, Colin Chapman, Graham Hill, John Surtees, Dan Gurney, Parnelli Jones, Bernie Ecclestone, Ron Tauranac, Ken Tyrrell… all team owners in the 1960s and ’70s and not one of them a toff. Sure, there were a few like Lord Hesketh, Rob Walker and HRH the Lord Louis of Stanley who were of the upper crust, but many of them were honest (or not so honest) lads who grew up with grimy fingers. To my eye, it is actually much more middle and upper class these days, when a dynamite education and wads of cash are the only ways in.

Thanks Joe. That’s leapt right up my reading list, as someone who has experienced very strange events (and not a little bother from family) researching my own forbears . . also not many books worth reading connected with F1 come on the Kindle (or any other device with the kindle app), which would be nicer if there was only somewhere I could offer to lend out the copy, now you can do that. I’m temporarily keen on Kindle books, because I’ve not had hardly any physical copies I lent returned to me this year. (Oh, and Wired just ran a howto on taking away the DRM if you feel you must)

Ironically, it’s theoretically possible for front running teams to be more sensitive to economic factors than back markers. Say the backmarker relies on private funding, and has next to no sponsorship. Now imagine your top team has lots of sponsorship, but proportionately that is a greater part of the income, and each sponsor represents a very large real budget that is expended. Now imagine a big down tick in sponsors expenditure. The team with hardly any exposure to sponsor funding may be proportionately less affected. I use the word exposure I think properly: you sure get the revenue stream, but equally you spend it to keep developing your car, so you are exposed to risk if that is not there, possibly compounding risk, because if you lay off a lot of people to make ends meet, or you cut other corners, you may drift backwards.

Another analogy is the answer to the question: “Which way do the safest blue chip bonds go?”, answer being “only down”.

I like what Monisha Kaltenborn has done, slowly adding smaller impression sponsors, steadily filling out the white space on that Sauber. In uncertain times, diversify. Also, even smarter, when things are looking tough, do not sell all your assets (sponsorship, advertising space) at once. You can always discount even into a down market. This works much the better when you have fixed costs of production, which are quantifiable and obviously known inside the team. IN other words, unlike much stock bond futures and option trading, you control the absolute margin. But if you sold the lot, no chance to pick up a improved deal, and when things are on the up, you can price in annual increases as well. In advertising, these moves tend to be later than business cycles, and more exaggerated. A less good, but more expressive analogy would be how long they took to sell leases at CenterPoint, a 70s silliness office building if there ever was one. Inflation was serious, so the debts incurred to build the thing were disappearing, and every week the potential lease over a term increased in value. Smart cookie, Monisha is. Hmm, to be honest their observable habits would make a good case study. I need some new material.

Even the 2014 engine regs are quite restrictive in which technologies are allowed. For example, 2014 F1 would be much more attractive to Honda if their Bishop Rotary Valve (BRV) engines were allowed. This is a technology Mercedes have also developed in the past before it was banned. F1 needs to really open up the regs to future road car relevant technology.

It’s very alarming, F1 could lose Mercedes and Renault in a heartbeat, we saw BMW, Toyota, and Honda jump ship with no warning. That would leaveferrari and cosworth, not good. I grew up with Indycar, and as much as I hate the spec series it has become, one has to wonder about the wisdom of teams spending 100 million dollars to be separated by thousandths of a second over a two to three mile lap…

I wholeheartedly agree in your musings Joe. I love F1, but my personal biggest problem with it, beside its narcissistic nature is the huge importance of aerodynamics. The teams are spending fortunes on R&D on something that has very little or no value outside F1 – and is only relevant under the current F1 rules. It also contributes to dull down the racing. Double diffuser, DRS (ridiculous in my view), Double DRS, Coanda exhaust and all that nonsense, that still is crucial for the competiveness of a car. Even since Max&Co in the late nineties introduced the silly looking narrow track cars and grooved tyres, many fans, myself included, have on various internet forums (rasf1 on Usenet and Atlas F1 , later Autosport, to mention two) advocated the opposite, i.e. much more mechanical grip and less aerodynamic grip. How? Ban diffusers, introduce seventies-style width on tyres with a lot more drag, strongly limit the wing area and angles – and allow for some venturi slots underneath the car, which would allow a car to closely follow another. How hard can it be? ;-) F1 could save tens or perhaps hundreds of millions of dollars being spent on pointless aerodynamics – and us fans would get to see close and exciting racing, which again would attract more interest.

I agree, I have never been a fan of oval racing but Indycar this year really had some belters at Fontana and Texas, all because they took the downforce off. I think a good rule of thumb would be that if an F1 car can take Eau Rouge flat out there is way too much downforce.More power and less aero would be nice

I think I wasted my subscription largely this year. Does anyone know what channel NBC is on UK Sky?

That’s another network split: ESPN and NBC sharing Indycar!

Honestly I am trying to find an out, because either just having Sky Go Monthly (pay / renew each month) or using (this took half the year to set up) a US credit card and proxying in to *real* ESPN internet subscription have started to look attractive.

Sorry if I am missing something really obvious, but finding out even what you have paid for is needle in haystack to me.

I only just found out that in theory Sky Go allows us to tune in to separate things on a laptop or a ipad in addition. Or maybe that is just Sky Go internet only, pay month by month. Been a year of frustration with new things I’m not sure I wanted. *

All I do know is I can search and search and never find any information. The “New Black” for companies seems to be confusing the customer until they scream “I don;t know what it is you sell, or how much it is, I just want it” after they jump through the hundredth hoop trying to buy something they probably are not being sold. I know it’d scupper the advertising game, but I keep thinking the economic bust is because somehow a rot set in of nobody declaring what they are in business to sell . .

*My pet hate of the last decade was how cell phone companies in theory have real time billing, but they don;t implement it half the time, so in effect they lock in subscriptions. “Oh, well, you have to have a perfect credit file, because you might use too much and owe us”**. Go fix your billing software, people. Only was standard system since 2001 or before . . this sort of thing distorts markets.

** Not ever borrowing means it’s very hard to establish any credit score! I actually have a over priced contract with O2 because they are a rare company who post positive credit records to the agencies.

Thanks for your comment, Robert, I need to take a look at all that. Next year or so going to be very interesting, all around motorsport.

Joe needs to be running F1! That is until he becomes a super rich old man and forgets why he got into the F1 business in the first place. At which point some other very passionate person with good sense should take over ;-)

On the other hand, the crisis created some intriguing changes as well.

I’m thinking about all the merges of racing series announced in the past days:

IRC and ERC: IRC – good TV rally, but no real value to it. ERC: great title to win, but no exposure. Thus: televised ERC. High five.

Grand-Am and ALMS: two sportscar racing series in the US. One with NASCAR ties, the other one with ACO. Not grasping the imagination of US racing fans. One series united for greater exposure and significance. Another tick.

DTM and Super GT: two silhouette racing series in Germany and Japan with the latter one applying the former’s regulations. Could be one of the greatest “tin(ish)-top F1 series” (if that makes sense) in the world once they start exchanging cars, drivers and races.

In a way, I wonder if the less the teams do, the better they will be, once that comes to pass. I don’t remember so much mucking about with regs and rules and tracks and teams . . well, I mean it seems a lot edgier lately. What I think is that there’s much tension being experienced, because as you say, it likely will be messy when Bernie is no longer, and maybe some are jockeying for position early. Which is a game of chicken, and Bernie likes to play games of chicken. I am only wildly speculating, but I lately keep thinking there is much more going on, and Bernie is thwarting a lot of moves, whack – a – mole style. I think by reflex, rather than to plan. It’s just a feeling I get. No proof. But a feeling that has had me distracted and on edge, affecting further my lesser enjoyment of this season.

Correct. In fact many of the engineers and Lola’s chief designer and US operations manager have relocated to Magna north of Toronto. The technical / engineering support for the Lola P1 (and all other Lola sports cars) car will now continue along with development of a new model for the 2014 combined Grand Am/ALMS *new* P2/DP class, (no P1 class in 2014). Engineering to be located north of Toronto and parts/sales from outside of Chicago with Carl Haas. The other separate assets not included in this weeks sale have *now* been offered (or they received a 2nd offer from this group) and this includes the composite and wind tunnel group. This weeks purchase also included the rights to the Lola name, design data, parts catalog and inventory.

Simple really, F1 should be owned by the teams. Then they can schedule races in countries that want them there (and where fans will actually attend), line their own pockets with tv rights money and chose to keep F1 on free to air tv (pleasing sponsors who will get greater coverage for their investment). Or they can keep being shafted by Bernie who enjoys lining bankers pockets. FIA selling the tv rights to Bernie for a song… biggest face palm moment in the history of F1 and one that condemned many teams to the scrap heap. As Frank Williams has always said, manufacturers will come and go but teams like Williams, McLaren et al are the life blood on the sport. The current owners do not care for heritage, only for squeezing every last dime possible.

It’s been tried before. Remember CART? Their competitiveness and resulting spending war drove the series out of business. How can you expect the owners to be responsible for the functioning of F-1 when they cannot even unite on a common front to collectively bargain with FOM and FIA? Owners will always put their own team above the common good. It just doesn’t work.

Take the current politiical influence of Ferrari, multiply it by 100, and that’s what a CART-style Formula One would look like. The structure they had in the late 1980s and early 1990s where the series was politically dominated by Carl Haas and Roger Penske (vote the way I want in board meetings or I won’t sell you a Lola chassis/Chevy engine next year) is not something anyone should seek to emulate.

One of the reasons that Bernie adds new tracks is that he needs to keep the income flowing, not to make a better show for the viewers and users.

Money is behind it all as usual, and Joe is completely correct in his analysis of the situation re CVC and their taking so much out of the sport.

Cosworth are ‘local’ to us, we had them as a customer many years ago in fact, but their engineering base is almost all engine-related, they haven’t really diversified outside of their main area of expertise, and so remain vulnerable to any engine change regulations that require a new engine with no obvious customers to pay for them.

Great article Joe. You’ve been making arguments along this line of thinking for quite a while now and I completely agree that the best thing for the sport is for the teamsand the FIA to own the commercial rights, and I thought this time around was the best chance to make that happen when the people at Exor where sniffing around the sport. But alas that came to nothing and now we have a new concord agreement all but signed and no progress has been made.

Do you think there is any chance at all that the teams and or the FIA may get organized at some point, get over their petty squables for a moment and realize that they are the show, they take the risks and they do the majority of the work? I’m sad to say I dont see this happening now, and it is all the teams fault.

Yes indeed. I also thought there were lots of such news in a very short time. With Lola an old big name of racing cars lowers the curtain. If am not mistaken Neil Oatley at McLaren must be one of the few remaining dinosaurs who started working for Eric Broadley. The world order in motor racing has changed though, notwithstanding Max Mosley’s effort a few years ago when he tried to stage a rebirth of 60ies & 70ies style F1 congregation. That was when Max thought that encouraging “independant” small organisations, like Lola was some time ago, to buy an engine from another “independant” engine supplier like Cosworth would increase the number of F1 teams and hopefully also improve the show. At the same time he also said that F1 doesn’t need Ferrari and the FIA would not hesitate to get rid of them. We now know that Monty got his head on a silver platter and that things went not according to plan A. The aftermath of all that is that we now have HRT and Marussia who have joined the circus to improve the show. Sort of. Nowadays only globalised corporations have the necessary cash to hire highly paid be-suited consultants who come to tell you how to do things and above all “how to communicate”. There is no place for Lola, March and Minardi. But at least the show goes on with new players like Sauber which appears to be run very efficiently. Today nobody would craft a racing car in a dusty backyard. Today no-one regrets people like Van Rossem or Andrea Moda who jumped on the moving bandwagon with pockets full of cash. Even more serious people like Lola and Minardi were a sort of family business which at some stage will have to deal with succession. And that’s were the fun starts. Who knows if Williams will still be there in 15 years?
The story with Cosworth is a bit more of a surprise. Albeit a little one. When Ford got out of F1 Cosworth soon became a dark horse. I always thought they could not carry on doing business as usual having big companies like Ferrari, Mercedes and Renault as competitors. As far as Porsche is concerned, again, I am not surprised. They clearly are in a position to sell 100’000 very expensive cars a year without doing very expensive advertising on F1 tracks, contrary to what Ferrari does. Porsche does not need F1 as a valid excuse to produce engines with the most advanced technology. They were in F1 previously, but only because somebody came up with lots of cash. We also heard that maybe Honda will come back soon. Since the engine today is not a differentiator anymore, having 4 engine suppliers by 2015 is more than enough. I don’t think the loss of Honda and Toyota has diminished F1 interest in Japan and it would be interesting to know if some statistics can prove this claim.

Nice piece Joe! I’m out of touch with today’s F1 engine costs, however I do recall about 15 years ago or so, a single F1 Renault engine was $500,000.00. Not sure if that was development costs spread out, orif that was the actual cost of a single engine. I’ve heard that the cost for a manufacture’s involvement in IndyCar starts at $25 – 30M, so where does that leave an F1 engine program? $100M? $150M? That’s just to get started, mind you. Additionally, the F1 manufacturer also must supply other teams. I have little doubt that a small team, lets say Sauber, is paying the actual cost for their engine from Ferrari, for instance. Forget profit here, the manufactures are just trying to get as close to breaking even as they can, but I’d wager it’s a loss, just how much of a loss I can’t say.

For a manufacturer to become involved in F1 is a massive undertaking and when looked at the economic drain on the firm in these questionable times, it’s quite easy to understand why BMW and even the massive manufacturers Honda and Toyota dropped F1. That was the writing on the wall and when you have companies as large as BMW, Honda, and Toyota dropping out, you really need to take a serious look at what you are doing wrong. The idea is to attract these firms to F1, not drive them away.

I think there comes a phase in every business, when you *plan* to be so entrenched, that you can tread air above the canyon for a few years, whilst working out what to do.

The problem with FOM et.al. is they are completely disconnected with any underlying engineering, and have exhibited disdain, if not been actually abusive towards, the talent.

So I think you get a exaggerated pattern now.

The penumbra cast (often deliberatively, see rpaco on that) across other sport, means there are few, at least far fewer, cubby holes for a engineer or anyone else to go hide out temporarily.

At the same time, precisely because F1 hit “Cruise Mode: Assimilate” long ago (think Microsoft) and has belatedly realized they need to innovate, there is compound uncertainty in even the thought of returning from a sabbatical.

This, at the same time, as almost everyone points out, those who have the experience to weather storms, are at natural retirement.

You just don’t often get linear decline in complex systems.

But the “retirement wall” combined with the crushing of feeder series by redefinition until they were perceived as not existing, has been looming obvious for too long.

I would like to believe, that many names (starting with Head, because he’s by no means done in potential, but I sadly know but a few of the important names others know here) would not be retiring if they thought there was something to fight for.

The other problem, which I am closer to, tangentially at least, is that advertising is predominantly Wile E. Coyote types. It’s dominated by absolutes, imperatives, outright assertions, not your engineering talk of variables, controls, unknowns, and culturally does not conduct post mortem tests on engine blowups. Dealer dies by taking own drugs: survivors block the memory, look in the catalogue for a better model . .

Combine the two, as the increasingly unholy clusterfuck of FOM has tendentially attracted all parties, and you get a life endangering headache that can stun at 100 yards.

Since I am worried my role in life has started – too late – to become Agony Aunt to potential customers in my trade, not supplier, more on that side soon.

My apologies to Lotus-e-Clan, above, for conflating his insight with a wider market, but 2008 was not at all when anyone woke up. It was the beginning of the denial. Weeks after that, in some parts, it was eyes down for bounteous windfalls. (distinction made adequately, I hope, between what Lotus-e-Clan saw, and how a wider economy functioned)

So, though Jem makes a very good argument that there is survivability in motorsports engineering (and I agree there are bulwarks and ramparts extant) the very fact that people may be wondering what might be a final blow, is a searing, even bitter, indictment of a deliberately fragile system.

March, Ralt, TWR, Reynard, Brabham, Lola, Cooper, Lotus… all British, all used to manufacture racing cars, none of them do any more (no, not THAT Lotus). These were the companies that supplied and drove much of the junior formulae worldwide. Even Van Diemen was swallowed by Panoz and so is not any longer anything like the company it used to be, and is based in the USA.

Another angle, contrarian to my increasing expectation of the floor falling out of the ad / sponsor market: if we do see high inflation soon (and how else the debts can be paid, I have no clue) then the few assets likely to draw attention and eyeballs will gain value rapidly. (at the same time as any incumbent debt is written off by inflation) . . the problem is appreciating how that will swing if real money is taken out of the overall market.

For years now, the mantra has been pumping up sports / live event ads, to avert viewer filtering / ad skipping / mental disconnect. That may have reached a peak.

I think F1 has a ability to absorb only so much sponsorship because of the structural problems every fan bemoans. Without change, I think it’s at capacity.

In other words, the hope might be for a (economic downward) correction strong enough to shake up F1’s approach, followed by double digit inflation soon enough to pick up the game.

That’s just looking at the team finances / CVC in isolation, though. I doubt anyone thinks race tickets can take inflation pressure beyond where they are.

Structurally, Bernie’s top down approach, rotating venues, and having so much of the risk of meets underwritten by _local (not national, usually and critically) states, and diving into other people’s revenue streams for bonus, is totally fragile. He already hikes contracts at double digits – and here is a assumption I’ll wildly make – likely over and above inflation. Throw in double digit headline inflation (many staples are double digit for years) and you get a hockey stick exponential. In other words, tracks dropping off the calendar like flies.

I’m not aware of any economists in the paddock. Maybe time to change that.

Really, this is textbook hedging at the system level, just doesn’t work with independent components, and with so many sensitive parts without any capital reserve. Many won’t make their margin calls.

It really was a bad week, but as an aside, I just looked at the Texas F1 website for fun (and to check the outrageous room rates you mentioned) and noticed it appears to be sold out!
I guess if you have a good business model, some aspects of motorsports are doing ok.

Chris, I meant my comment was flippant, not yours, just so you know. Sorry for that, it was poor grammar on my part.

Austin is pretty lucky. They have a big tech culture there, in fact maybe one of the best geek per capita ratios may just explain how they got this race sold.

Although I can’t say from direct experience in this instance, I always got the impression that Texans like to rally around things that they can be proud of. I remember first reading about the amazing growth of Austin, in National Geographic, as a kid, when it was really still “tract” housing sprawl outside the old center. Then they worked out it was a very quiet place, seismically, and so the silicon valley people thought it a good spot to put chip “fabs” (factories) which any tiniest vibration harass. I’ve never been, and my plan to meet family there spoiled because my mom and I had some bad health spells a few months back, so plans were out. But it’s a place I always wanted to go take a look at. Next year, I hope.

I think what I was saying, is that – at least for many parts of America – there is a cultural “buy in” to selling one’s home state or town strongly and upbeat. I reckon this goes back to when America first expanded, and towns sprang up wherever there was a railroad, and to make them viable, well, you had to promote energetically. So it’s hardly more than three or four generations since selling the local attractions was directly connected to your wellbeing.

Compare that, with me hypothetically singing the praises of my neighborhood. Now, if I wasn’t laughed at, over in England, save for really small communities, selling your home town makes people think you are “on the graft” – corrupt. Maybe that has something to do with the age of a town or city, and something like that affected promoting the NJ race. I can only speculate. Small towns and villages know their officials better, and maybe trust them more.

Thing is, Chris, so much of Korea is so good at selling itself – well, maybe not as a destination for foreigners, but for certain your business acumen and products, but somehow reticent to speak up for travelling or living there. (I did see the recent tourist campaign, but it looked far too generic, could have been Thailand, if you were not paying attention)

I just saw today, that Samsung has been awarded a Royal Warrant to supply audio visual kit to our Queen.

Wow, I don’t recall SONY, or any Asia – Pacific company ever getting one of those. Samsung did something really right. But again, though Samsung advertise strongly, and are very good at that, there’s no boasting in their campaigns about getting a Royal Warrant. Usually it is only the most ancient of English companies who get those, at least statistically (a neighbour of mine specialised getting those stuffy companies to retail on the net, boy was that fascinating to see in action . )

If the Korean GP was moved to somewhere not in the middle of what looks so bleak a terrain, I see you your rushing to Austin, and say I’d go to a better located Korean GP in a instant.

No worries. I’m a yank, not Korean, so I understand Texans pretty well. You got it about right-they rally around big events.
It just pissed me off Korea screwed it up so badly. But we call this place “The land of the not quite right” for a reason.

Cool. Thanks. I came across some blog entry that seemed a bit like a meme thing, early this year, entitled “Because China”. A sort of parody of all the inexplicable things that make you want to sit down, with “Because China” as the obvious reason for why whoever was doing whatever that was totally unbelievable. I wish the silly things that happen local to me were so easily parodied. I just don’t know how to illustrate “Neighbor’s friend arraigned for trial, own solicitor prevents him from seeing evidence, tells him due for trial 10pm night before” (the guy was emailed the case against him far after normal hours, told to go listen to the interview tapes, ouch) because I am not sure that is “Because Tower Hamlets” or “Because this is too broken”. I don’t mean to get too far serious, but I only heard that because it was blurted out, and I’ve heard the same thing many times. So I stayed up to check the rules, yup, totally not what should happen. Texting the references for second or third hand use felt the most awfully futile and pathetic thing.

I guess what I mean is, there’s really strange things beyond how marketing works, when in the age of communication a first world nation can habitually abuse their own rules, and I almost felt better, selfishly, it was too late to offer any assistance, because that guy has been sold out so bad, no hope.

I have to be careful, of course, not that I’d discuss such a case with anyone – that’s improper stuff. But it made me recall when someone here commented “well, sure John’s not a attorney, or he’d not dare speak badly of the local judges”. Thing is, that’s exactly the problem a friend who is a defender told me about. Just before going very quiet on me. No, I didn’t open my big mouth. But I did to him, because I was stunned how close a defender can be to beholden to judges around here. Last night’s diversion is to take place in a more serious court. On reflection though, despite maybe the guy who made that comment was accurate, how awful a indictment that someone says I couldn’t be a attorney because I spoke critically of a judge? Have we gone so far into passivity and abject compliance, shall we genuflect at the altar of socially conformist obsequiousness?

My tonic to all this, is often reading about the development of modern America. If that fails, I cold call after a glass, well two, of good wine ..

I better get off the proverbial pulpit, but in all these things, there are two factors I see: not enough straight reporting, too few people prepared to speak out. Just even someone employed to PR for their local authority, speaking out that marketing is badly done can hurt their career. Not different in to many for profit companies. It’s a human frailty. I belatedly realized I had a chance to shake up a deal, which concluded unhappily this week, but where was I? Keeping my head down. I’m ashamed of myself.

the second one is very detailed, but maybe matters ultimately to the auto industry. My lousy summary is they have a uranium isotope that is incredibly useful, for medical things too, works for thorium reactors. Bloke who designed the messy water pressure reactors also designed the far cleaner thorium ones, for which this stuff is essential, but got cut down because he was thought to be playing games, then the lobby kicked in and his work buried for decades. Apparently this useful stuff is mandated to be destroyed, it’s still needed, and a new stockpile would take decades to regenerate.

err, drifted too far. But if one last thing, I took the bus back from the office late, laden with papers, else I’d walk. Sardined amidst a thicket of Italian 20 somethings. Full house of them. Okay, some nice girls caught my eye first, but then I looked at the ratio of men: about 6 to 1. This bus at every stop had more Italians of similar age getting on. The trickle is becoming a flood. I guess the girls are more likely to stay at home, I mean if a man has no work, prospects in love not good, so men hustle and have to go get. Sure, this is a anecdote, but it’s not my first. I found it disturbing, in the sense we may be soon enough fighting over basic facilities. It may be the fire two floors above was because the place is legally designed for four, not four rooms filled three to each with a first world economic migrant’s privileged, educated, but refugee friends. I can’t find out, the leaseholder is too close to a Privy Councillor, it’s getting hushed, but at least we got the appalling fire safety onto public record.

Maybe, and I’m not sure it’s so epicurian a prospect, we’re about to get a bit of frontier mentality over again, our way here. Push, shove.

If that works, shakes things up, all good. I hope so. I hope a good shake up comes to everyone, also F1. Thanks for your reply, and I promise I’ll get back to more direct F1 things asap. It just hit a note, with me. I mean I usually like to brazenly sell, but I know now I have been stricken with worries trying to suss out what the world is doing, and lost my own direction a while. all best ~ j

Recap on the legal thing – it turns out more benign. But there does seem to be a different law operating this side of London.

This is what caught me for a while now: shift hours. I finally found I could manage them only by catnapping alternate nights, proper sleep the interleaving nights. I just had a lot on. I shouldn’t do it, but I will always push hours if something comes up. On the other hand, I am having to be strict with my biz partner he learns to actually turn off the machines and chill. Fortunately turns out we both dig cooking, so there’s the break. Lock out the work by feeding everyone.

they are suggesting a link between testosterone and “honesty”, or in my book being a bit loud and outspoken. Hmm, I always had rather high T counts . . early pattern baldness etc. If that’s a excuse for my posting style here, I better go subject myself for their next study!